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Trump's new tax plan looks a lot like the old one

The “new” tax plan that the White House unveiled today looks a lot like President Donald Trump’s old economic plan from the election campaign, with deep cuts to corporate and individual tax rates. Even with dynamic scoring, however, the old plan was expected to increase the Federal budget deficit by $7trn over the next decade. For that reason alone, this plan is never getting approved by Congress, particularly not through a budget reconciliation that requires ten-year revenue neutrality.
Paul Ashworth Chief North America Economist
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US Data Response

Industrial Production (Jul.)

The 0.6% m/m rise in industrial production in July was much stronger than we expected and provides another clear sign that the economy is still in expansionary territory. That said, the likely drag on manufacturing from the impending global economic downturn means that the resilience of production may not last for long.

16 August 2022

US Economics Weekly

More good news on inflation coming soon

The drop back in CPI inflation in July wasn’t enough alone to convince Fed officials to change their plans for interest rate hikes. But we expect the better news on inflation to continue over the coming months, which will eventually persuade the Fed to halt its tightening cycle early next year.

12 August 2022

US Economics Update

Is there really such thing as a ‘jobful’ recession?

While history shows that recessions can begin even while employment is still rising, the current rate of payroll employment growth is far too strong to be consistent with an economic downturn. By the same token, although we think an outright contraction will be avoided, any recession over the next couple of years would almost certainly coincide with a decline in employment and rise in the unemployment rate.

11 August 2022

More from Paul Ashworth

US Data Response

GDP (Q2)

The relatively disappointing 6.5% annualised gain in second-quarter GDP, which was well below the consensus at 8.5%, included unexpected declines in government spending and residential investment, and a bigger drag from inventories than we had anticipated. The good news is that the economy has now surpassed its pre-pandemic level. But with the impact from the fiscal stimulus waning, surging prices weakening purchasing power, the delta variant running amok in the south and the saving rate lower than we thought, we expect real GDP growth to slow to 3.5% annualised in the second half of this year.  

29 July 2021

US Data Response

Retail Sales (June)

The 0.6% m/m gain in retail sales in June was a little stronger than we were expecting, but upward revisions to the decline in May take the gloss off that somewhat and, besides, with consumer prices rising by an even bigger 0.9% last month, that still means consumption fell in real terms.

16 July 2021

US Economics Update

Inflation “transitory”, but Fed now projects rate hikes

The Fed continued to stick to its view that the surge in inflation "largely" reflects "transitory factors", but officials revised their inflation projections up significantly for this year and the median projection now shows two 25bp interest rate hikes in 2023. In his press conference, Chair Jerome Powell argued that the Fed was still “a ways off” from achieving the substantial further progress toward its dual mandate goals that would trigger a tapering of its monthly asset purchases.

16 June 2021
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